Opportunities Abundant in Gaming Industry, if You Watch Out for Yourself

ByBenjamin Moore |April 3, 2013

In 2012, 27 video game development studios were closed. Among the closures were big-league names like THQ, Zipper Interactive, Rockstar Vancouver, and SCE Studio Liverpool. Some of these studios existed for well over a decade and they created games played by millions.

Despite video games getting bigger and bigger—both the Xbox 360 and PlayStation 3 have sold more than 70 million units worldwide—it seems as though an increasing number of closures happen every year. Why?

The industry is experiencing a seismic shift in the way it thinks about business.

For decades, video games only existed as physical media such as cartridges, CDs, or DVDs. However, with the introduction of the Xbox 360, PlayStation 3, and Nintendo Wii, downloadable games have risen in prominence and are now a viable way for publishers to distribute games. Many times, big titles like Tomb Raider and Dead Space 3 are available at retail and through digital stores simultaneously.

Because of wider availability, prices tend to drop faster than in years past. The aforementioned Dead Space 3, released Feb. 5, went from $60 to $40 not even a month after it hit stores.

Digital stores also have created a relatively new type of game that may not find a large audience at retail but works well in the online realm. Downloadable games require much less of a financial investment and allow small development teams to complete them.

The impetus Provinciano had for Retro City Rampage came from a desire to do something that was his own. For years, he worked as a programmer at studios like Propaganda Games, Jet Black Games, and Backbone Entertainment. While he learned many skills at these studios, he never got to decide what he worked on. He was more of a crewmember rather than the captain of the ship. He saw Retro City Rampage as a chance to change that.

Photo courtesy of Jason Andersen

Jason Andersen and his family: (going clockwise) Jessica and their sons, Xander and Andrew.

Jason Andersen has a different story. Rather than willingly leave the industry, he had to endure the November 2010 closure Budcat Creations, an Iowa City studio he co-founded. From 2000 to 2010, Budcat worked on big games such as Medal of Honor and Madden NFL. Though the studio had some original titles such as Blast Works: Build, Trade, Destroy and The New York Times Crosswords, most of the studio’s games were made as part of a contract with a publisher. As such, Budcat had relatively limited control with what it produced.

This only became more true when Activision—a publisher based in Santa Monica, Calif.—purchased the studio in 2008. Activision had Budcat work almost exclusively on games in the Guitar Hero series. When sales started to decline, Activision decided to shut the studio down. Employees had no warning and many were devastated.

Andersen is still trying to move on from the closure. He was under a non-compete clause for 18 months, meaning he couldn’t seek work at another studio. During this time, Andersen traveled, dabbled in woodworking, and got a chance to use his pilot license. For a while, it seemed Andersen might never return to the industry.

Then something happened.

On Aug. 9, 2012, OUYA was successfully funded on Kickstarter — a crowdfunding website. Set to release in June 2013, OUYA is an open source, Android-based videogame console developed by OUYA Inc. that will cost $99. One of the main appeals of OUYA is that anyone can release a game for it. Unlike other contemporary gaming systems, OUYA comes equipped with everything you need to develop a game right out of the box.

OUYA won’t have physical, retail games. All games will be downloadable. Additionally, there won’t be a stringent certification process for games like there is on other consoles. As long as the game works and doesn’t contain content that violates the terms of use, it can be sold on the OUYA marketplace.

After hearing about OUYA, Jason Andersen became inspired. Here was an opportunity for him to create something without the constraints of managing an office or reporting to a publisher. He didn’t even have to work for someone. Andersen could develop an entire game from the comfort of his home in Iowa City and distribute it on a platform with a sizeable potential audience.

Photos courtesy of Jason Andersen

Models for characters in the Lobo Pantalones video game Jason Andersen built.

Without wasting any time, Andersen contacted several other former Budcat employees and began work on Lobo Pantalones, a 2D platformer not unlike the overwhelmingly popular Super Mario Bros. games. Set in the 1714 southern Caribbean, Lobo Pantalones uses the golden age of pirates as its playground. All of the characters and many of the sets were modeled after physical constructions built specifically for the game.

While it’s impossible to know for sure whether or not OUYA will succeed, Andersen has high hopes for the platform.

Though Tom Heinecke, a former 3D artist at Budcat, isn’t working with OUYA, he is dabbling in a similarly open market. Heinecke released bit Dungeon for the iPhone on Dec. 14, 2012, and the iPad on Jan. 15. Previously only available on Internet browsers, bit Dungeon plays like a top-down Legend of Zelda with many roguelike elements.

As with the OUYA marketplace, Apple also allows anyone to submit a game. This unrestrained marketplace has seen the rise of less conventional business models, such as free games that use ads for revenue.

Heinecke plans to supplement the low, 99-cent cost of bit Dungeon with microtransactions.

Tom Heinecke

These are tiny in-app purchases that let a player make his or her progression through a game a little bit easier, such as by buying stronger weapons.

While none of the new business models have replaced $60 retail games, they have changed the playing field. With a new PlayStation coming out later this year and another Xbox rumored, the next generation of games will soon be defined. The transition has been fairly painful so far, as the deaths of many studios indicates.

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In the last five years, Activision has closed nine development studios. But more avenues than ever before exist now for developers to explore. These avenues are needed sorely if Budcat’s story is any indication.

Three current Activision employees who deal with public questions about Activision were contacted recently to talk about Budcat. All either were unresponsive when asked about the once-well known Iowa maker of Guitar Hero, or were not aware of the studio.

Though speaking for Activision as a whole may be impossible, these key employees have made Budcat seem both gone and forgotten.